Foreign currency exchange market is a global market where are traded for the other. Traders are able to buy, sell, speculate and exchange currencies on this medium of the exchange market. It is a decentralized market; there is no particular physical location where you go to buy and sell. Every form of exchange is done on the internet.
THE EARLY DAYS OF TRADING
Fx started a very long time ago when there was no internet. In the far past, it was not a bit easy to trade the market because the medium was not so efficient. It was very unattractive to many except some organisation whose obligation it is to trade in the market for the sake of their businesses and national economy. Those organisations included the banks, central banks, commercial companies, hedge funds, investment management firms, etc. Before the advent of online trading was being conducted through phones and fax communications. After the advent, fx exchange became so popular among retail traders, such that they outnumber other bigger shot traders like the banks and multinational firms.
CHARACTERISTICS OF THE FOREIGN EXCHANGE MARKET
There are a lot of notable things about the market:
- Currently, the market is the largest market in the world and accounts for over $5 billion on a daily basis. Traders trade in this market from all parts of the world and at all time of the day.
- The market is decentralised. This means there is no physical location for trading the market. Almost all (if not all) trading activity is carried out online.
- The market has high liquidity rate. At every time, there is someone willing to buy securities displayed in the market and vice versa. A trader can also decide to cash out at any time without any problems at all.
- The market has a low success rate. Records have it that only about 10% of traders in the market are successful. This can be attributed to a lot of things like wrong market analysis, improper preparation, etc. That notwithstanding, the fact still remains that no matter how good a trader is in the market or how long he or she has traded in the market, there is bound to be losses at some points.